I had the pleasure of listening to Dan Ariely at UXI Live conference in Israel. He’s a real rock star in our house. My eldest daughter decided that she wanted to learn behavioral economics after reading his book, Predictably Irrational. She’s studying economics and psychology at Hebrew University. Having the opportunity to hear him in person, with my daughters, was a real treat.

Why is he such a rock star? He gets us. I don’t mean me personally, I’ve never met him in person, but I mean he understands what makes us, everyone, tick. He’s done experiments to see how people will react in different situations. It’s pretty interesting stuff.

Here what Professor Ariely spoke about at the conference:

Reward Substitution

We sometimes need to make short term decisions that will affect our long terms goals. Sometimes those short term decisions can be unpleasant. If you could have half a package of the best chocolate now or wait a week and you could have a whole package, what would you do? If the same question were asked if you could get a 1/2 package in a year or a whole package in a year and a week, does the answer change?

When Professor Ariely was younger, he contacted hepatitis C from a bad blood transfusion. It took seven years to diagnose it, and at that time, the FDA came out with a new experimental drug. The side effects of the drug were nausea, vomiting, fever and shaking for 16 hours after taking the drug. He needed to inject himself with the drug 3 times a week for 1 1/2 years. Without this drug, his liver would be destroyed within 30 years.

Most people might think that they would be able to do this. Professor Ariely was not the only one taking the drug, but he was the only one that finished the program and that didn’t miss an injection. The idea of putting yourself through so much pain 3 times a week now, as opposed to something that will happen in the future is not an easy trade off. How was he able to do it? On the day of the injection he would go out in the morning and rent movies. He would keep these movies with him all day. In the evening, he’d put a movie in the VCR, give himself the injection, and press play. He prepared himself for the side effects, but he would start the movie before they began.

This helped Professor Ariely associate the shot with something that he loved to do – watch movies. He didn’t think about the long term goal of saving his liver. If he did, he probably would not have been able to consistently give himself the treatment. By using Reward Substitution, getting an immediate benefit to the negative thing he needed to do, he was able to succeed. His liver is fine now, completely healed.

How can we use this in our own lives? Take global warming (just as an example – you don’t need to believe it’s true). It’s not really affecting us now. We’ll be long dead before then. People may love their children, but that won’t be a strong enough incentive for something that is so far in the future. Instead of focusing on the future, we need to think of rewards that we get now for doing the right thing. Buying hybrid cars is a good example. You do something good and others see it, so we get immediate gratification.

Ulysses Contract

We make deals with ourselves to make sure that we do things even if they are unpleasant. No one looks forward to getting a colonoscopy. People will make appointments because they need to have the procedure done, but cancel them because they don’t want to do it. They’ll find all sorts of excuses. Professor Ariely tried having people put down $500 when they make the appointment. If they show up, they get the money back. If not, they lose the money. People who put their money where their mouth is were more likely to go for the procedure. That’s an extreme case – no one wants to be out $500. What price is high enough to make you do something you don’t like?

Dr. Ariely also mentioned Clocky – it’s an alarm clock that moves all over the room when it goes off. People who have a hard time getting up will set the clock to go off in the morning and need to run after it which helps them wake up in the morning.

If you are trying to diet and like cake, you may consider buying a cake and only eating a little bit every day. Some people are able to do it, but it is very difficult to most. Most people would rather not have the cake in the house at all, and so therefore, will not have ability to eat it.

Learning Self Control

The marshmallow test was created to test children’s self control and see how it affected them in the future. The way it goes is that a child of about 6-years-old is offered a marshmallow. If they are willing to wait a few minutes, they will get two marshmallows. A lot of 6-year-olds don’t have the ability to wait the short time span. The ones that were able to wait did better in college.

That doesn’t mean that it was easy for these children to push off their gratification. Instead of waiting patiently for the second marshmallow, these kids would pace and do other things, like dreaming that the marshmallow was a cloud, occupy themselves away from the immediate gratification. That’s good news. That means that there are ways for people to learn self control, which leads to success.

I could have listened to Professor Ariely for hours. He is a charismatic and interesting speaker. I want to thank the people at UXI for providing the opportunity to hear him speak. Well Done!